Credit: Robert Triggs / Android Authority
“The smartphone market has saturated and consumers are holding on to their phones longer, so manufacturers are trying to get more out of each sale that they get,” said Avi Greengart, President, Lead Analyst, Techsponential. “While this is opportunistic, it also reflects consumer demand: a smartphone is an important long term investment that is used more often and for more things today than just a few years ago. It helps that in wealthy markets like the U.S., carriers spread the cost out over as much as three years with no interest.”
There has been some pushback. Greengart points out that phone makers have responded to $1,600 phones with excellent $800 phones. OnePlus is a prime example of a player in this space. It’s worth noting that the best-selling phones from Apple, Samsung, and others aren’t their highest-cost offerings, but are instead the more affordable fare such as the Apple iPhone 11 and Samsung Galaxy A50.
You get what you pay for. Yes, we’re talking about the actual hardware of today’s phones
But — and this is a big but — you get what you pay for. Yes, we’re talking about the actual hardware of today’s phones.
“Screens are markedly larger and better than they were just a few years ago, are covered with more shatter-resistant glass, and are installed in cases with tighter tolerances and minimal bezels,” said Greengart. “The batteries are bigger. Storage sizes have increased dramatically. The silicon has grown to include application processors that rival laptops in performance, more memory, and powerful chips for graphics and AI. Phones have more antennas to work on more networks around the world, and often have a half dozen cameras along with depth sensors and components for biometrics and security. The most expensive phones have new technologies like foldable displays and hinges, ultra wide-band modems, periscope zoom mechanisms, sonar or LiDAR, or mmWave 5G modems and radio frequency processing.”
In other words: It all adds up.
It’s not all about the parts
Credit: Oliver Cragg / Android Authority
There’s another factor to weigh here: software. True, Google gives Android away at no cost, but that doesn’t mean phone makers get away scot-free. Consider Samsung. It puts tons of work into One UI. Similarly, Huawei invests in EMUI, as do LG, Motorola, Sony, Xiaomi, and every other OEM in their own launchers and apps.
And then there are service offerings such as Siri, Google Assistant, and Bixby.
“If you think about artificial intelligence as an example, and the different ways it comes up in a device and the cost you face from a data center side,” pointed out Carolina Milanesi, technology analyst. “Clearly not every vendor has its own, but I would think it has impacted license fees. Royalties might be another area where we would have seen an increase.”
Hardware vendors are not about to eat the costs of developing software and hosting data.
Hardware vendors are not about to eat these costs. Surely they are passing them along to consumers in some form.
Milanesi perhaps put it best when she concluded, “Having a kitchen ‘sync’ in your hand will cost you.”
Will we see any reprieve?
It’s hard to imagine that smartphone prices will come down. Instead, expect the top-tier flagships to continue to push the envelope, both in terms of what’s on board each handset as well as what the phone maker charges for it.
Those who cannot afford the $50-per-month payments for $1,200 phones will simply have to resign themselves to the “flagship killers” populating the $600 – $900 space. The good news is that there’s no shortage of options there. Phone makers such as OnePlus, LG, Xiaomi and even Motorola and Nokia, have churned out solid devices that are every bit as worthy of your dollar as is the top-of-the-line Samsung Galaxy Note.